FCC – E-Rate Law Advisorhttps://www.eratelaw.com
Latest News & Legal Commentary on the E-Rate ProgramThu, 14 Feb 2019 20:26:04 +0000en-UShourly1https://wordpress.org/?v=4.9.10FCC Likely to Permanently Eliminate the Two-in-Five Rule for E-rate Category Twohttps://www.eratelaw.com/2019/02/fcc-likely-to-permanently-eliminate-the-two-in-five-rule-for-e-rate-category-two/
https://www.eratelaw.com/2019/02/fcc-likely-to-permanently-eliminate-the-two-in-five-rule-for-e-rate-category-two/#respondThu, 14 Feb 2019 20:25:22 +0000https://www.eratelaw.com/?p=1413Continue Reading]]>On February 11, 2019, the FCC’s Wireline Competition Bureau released a report concluding that the FCC should permanently eliminate the two-in-five rule that was first effective in 2005, in favor of a budget-based approach for distributing E-rate funding for equipment and services inside school and library buildings that was adopted on a temporary basis in 2014.

E-rate program funding is broadly divided into two types: Category 1, which provides funding for data transmission and broadband internet access services, and Category 2, which provides funding for managed Wi-Fi and equipment for internal connections within school and library buildings. You may recall that, beginning in funding year 2005, the FCC adopted the “two-in-five rule,” which limited Category 2 funding for a given E-rate recipient to two out of every five funding years. However, in December 2014 the FCC significantly reformed the E-rate program and established a budget mechanism for Category 2 funding. The new budget approach allocated a per student budget (or per square foot for libraries) that recipients could spend at one time, or spread out over the course of multiple years. For example, schools are allocated a total of $150 per student over a five-year period, and could spread out that budget evenly over each of the five years, or spend it all in the first year.

The FCC had tasked the bureau with analyzing whether this new approach was effective in ensuring greater access to Category 2 funding. After reviewing data over the past five years, the bureau concluded that the new approach resulted in “greater funding is available for internal connections, distributed to more applicants, in a more equitable and predictable manner, giving applicants more flexibility to determine how best to upgrade their systems.” In other words, the five-year budget approach was found to be a resounding success when compared to the former two-in-five rule, which most E-rate participants had found inflexible and difficult to administer.

In addition to maintaining the Category 2 budget funding approach, the bureau recommended that the FCC consider targeted changes to the budgets moving forward, such as an increase in the funding floor to encourage rural schools and libraries to participate in the program. In order for the change to become permanent, the full FCC must issue an order acting on the bureau’s recommendation. That being said, we expect the Category 2 budget approach to stay in place for at least five more years.

]]>https://www.eratelaw.com/2019/02/fcc-likely-to-permanently-eliminate-the-two-in-five-rule-for-e-rate-category-two/feed/0E-rate for Both Categories 1 and 2 To Be Fully Funded in the 2018 Funding Yearhttps://www.eratelaw.com/2018/08/e-rate-for-both-categories-1-and-2-to-be-fully-funded-in-the-2018-funding-year/
https://www.eratelaw.com/2018/08/e-rate-for-both-categories-1-and-2-to-be-fully-funded-in-the-2018-funding-year/#respondWed, 22 Aug 2018 16:56:45 +0000https://www.eratelaw.com/?p=1412Continue Reading]]>On August 17, 2018, the FCC’s Wireline Competition Bureau announced that once again, there will be sufficient funding to meet applicant demand for both Category 1 services (such as broadband services) and Category 2 equipment and services (such as managed Wi-Fi and equipment) for the 2018 funding year, which began on July 1, 2018.

The total demand for the funding year is estimated to be $2.7 billion—well below the $4 billion cap for funding year 2018. There also remains $1.2 billion in unused funds from prior years, which will likely continue to be rolled over to subsequent years given the projected demand for this year. Demand for funding for schools to construct and operate their own networks through the deployment of dark fiber has been much lower than what was anticipated by the FCC. This was not necessarily a surprise to those in the industry, however, who understood that schools and libraries were not necessarily equipped to manage complex communications networks.

What was not widely anticipated when the FCC adopted the second E-rate modernization order in 2014, is that the demand for Category 2 funding has turned out to be relatively low and it has declined over time. USAC has estimated that most of the demand for funding year 2018, or just over $2 billion, is for Category 1 services, compared to only $745 million for Category 2. Given that Category 2 includes managed Wi-Fi services, there were concerns in 2014 that the introduction of funding for such services would outstrip program resources. Yet requests for Category 1 requests have consistently exceeded those for Category 2 funding since the order was adopted, with the total Category 2 requests declining each year.

]]>https://www.eratelaw.com/2018/08/e-rate-for-both-categories-1-and-2-to-be-fully-funded-in-the-2018-funding-year/feed/0FCC Launches Rulemaking to Guard Against USF Funding Being Used Contrary to National Securityhttps://www.eratelaw.com/2018/05/fcc-launches-rulemaking-to-guard-against-usf-funding-being-used-contrary-to-national-security/
https://www.eratelaw.com/2018/05/fcc-launches-rulemaking-to-guard-against-usf-funding-being-used-contrary-to-national-security/#respondMon, 07 May 2018 14:00:28 +0000https://www.eratelaw.com/?p=1406Continue Reading]]>The comment period is now open for the FCC’s proposed rule to ensure that USF funds, such as E-rate and Lifeline, are not used in a manner that compromises or poses a threat to national security. On April 17, 2018, the Commission issued a notice of proposed rulemaking that proposes that “USF support may [not] be used to purchase or obtain any equipment or services produced or provided by a company posing a national security threat to the integrity of communications networks.” The rule would apply to USF funds disbursed to the funding recipient and any USF funds used by a contractor or subcontractor of the recipient.

In order to establish this rule, the FCC asks whether it should create a bright line rule, prohibiting the sale of the services of any company or the sale of equipment of any manufacturer that poses a threat to national security, or rather, whether it should limit the scope to equipment and services that relate to the management of a network (and network data) and any system that can interfere with “the confidentiality, availability, or integrity of a network.” The FCC requests comment on whether there should be program specific rules or whether a general rule across the USF programs would be sufficient.

The FCC also asks for methods for identifying which companies and manufacturers may pose a national security threat. Several potential ideas include: FCC-established criteria, referring to existing statutes that list criteria for barred companies, and relying on other federal agencies that maintain lists of prohibited providers. For example, the 2018 National Defense Authorization Act (NDAA) bars the Department of Defense from using telecommunications equipment provided by Huawei Technologies or ZTE Corporation. The FCC asks if it should rely on the companies barred by the NDAA.

The FCC proposes to enforce the rule through USAC compliance audits, and the FCC requests comments on how USAC should recover funds from a rule violation and which party should be liable for any violations. Lastly, the FCC seeks analysis on whether the proposed rule effectively balances the objectives of national security and the goals of universal service.